Chahal: Silicon Valley’s most self-destructive founder

Chahal’s self-destruction is an extreme case, but it demonstrates a more common risk in Silicon Valley of entrepreneurs who amass too much power.Bloomberg | August 16, 2016, 19:00 IST

By Ellen Huet

Gurbaksh Chahal wanted to be a role model for the sales team at his digital advertising startup and show them how to close a deal. But the co-founder and chief executive officer of Gravity4 knew he couldn’t be effective as the face of the business.

In 2014, he had been removed from the last company he started following a fight with his girlfriend a year earlier, in which he hit and kicked her 117 times. The brutal ordeal, which had been caught on security-camera footage, resulted in probation for Chahal and shattered his reputation.

Last year, Chahal came up with a solution: He created an alter ego named Christian Gray, according to a half dozen people familiar with the situation. The character, who shares a very similar name with one from 50 Shades of Grey, has his own LinkedIn page featuring a head shot of Josh Dallas, an actor who appears on the ABC fairytale drama Once Upon a Time.

Chahal would e-mail marketing professionals as Gray, and when he hooked a potential customer, the CEO would berate staff for being outsold by a fake person, said the people, who asked not to be named for fear of retribution. Two people said Chahal had at times used Gray’s sales leads as an excuse to fire workers.

But Gray’s career didn’t last long. While still on probation from his previous domestic-violence conviction, Chahal kicked another girlfriend in late 2014 and threatened to report her to immigration services, according to a police report that surfaced last year. While there wasn’t enough evidence to file criminal charges in that incident, it led to a judge revoking his probation last month, prompting Chahal to hand over the CEO role to his sister.

Gravity4 and an attorney for Chahal didn’t respond to multiple requests for comment. A California district judge sentenced Chahal on Friday to a year in a county jail for violating his probation, pending an appeal, which his attorney said he plans to do.

Chahal’s self-destruction—and the former colleagues, shareholders, customers, and women left in the rubble—is an extreme case, but it demonstrates a more common risk in Silicon Valley of entrepreneurs who amass too much power. Chahal’s earlier achievements enabled him to run his businesses unchecked and use vague promises of startup riches to recruit talent.

“He has a brilliant mind and a very flawed personality,” said Sam Singer, a crisis communications consultant who worked for Chahal in 2014. “He has become a poster child for everything the public thinks is wrong with Silicon Valley: wealth that comes too fast and too easily, arrogant behavior, the belief that the rules don’t apply to them and they are somehow above the law.”

Success as revenge

Before the 34-year-old crumbled, Chahal was a model of young and flashy entrepreneurial success. As a fresh multimillionaire in 2008, he appeared on the Oprah Winfrey Show, where he recounted selling his first company at age 18 for $40 million and his second at 23 for $300 million, landing him a leadership role at Yahoo!

During the interview, Chahal discussed growing up as a young Sikh child in San Jose, where bullies at school used to tease him about wearing a turban and made him cry. (He’s since stopped wearing it.) “Well, this is a wonderful moment, because the best revenge is doing well,” Winfrey said.

At the time, Chahal agreed, but his actions over the next several years seemed to reflect a different mantra. He was charged with 47 felonies stemming from the 2013 attack and pled guilty to lesser a charge after the video was ruled inadmissible. He also railed against the victim by writing a since-deleted blog post that said she was having unprotected sex with other people for money.

He was still furious about getting booted from RadiumOne, the previous startup he founded and nearly took public. Chahal used his own money to form a new ad-tech startup in 2014 and tried to buy his old company. RadiumOne scoffed at the proposal from Chahal’s Gravity4, telling the technology website Recode that the offer “fails to reflect the value that has been built in the company.”

Gravity4 could have been Chahal’s next revenge-by-success story. The goal was to buy up disparate ad-tech companies and weave them together to create a software platform that serves an advertiser’s every need. It hoped to let customers create campaigns and distribute them seamlessly to social networks, e-mail, and smartphones. The project was ambitious, and advertisers said it would be a very valuable product.

Fall of the empireFrom a snow-white penthouse office overlooking San Francisco Bay, Chahal recruited employees by telling them—and his Twitter followers—that the company was worth $1 billion and in many cases, by promising shares that would make them rich when the company went public. Gravity4 soon began snapping up ad-tech startups, at least 15 of them, according to one of the company’s press releases.

But things quickly fell apart. Chahal had picked Dan Grigorovici to be his co-founder and tasked him with building the technology that tied everything together. But the platform never worked, said six people familiar with the situation. Gravity4 failed to connect services from each company it acquired, the people said.

Last year, Gravity4 was hit by two civil lawsuits from former employees, with allegations including gender discrimination, harassment, and wrongful termination. In a response, the defendants said a former employee was trying to publicize negative claims to get money he wasn’t owed and that the suit violated a nondisclosure agreement.

One of the lawsuits said Grigorovici had stolen proprietary information from his former employer, ad-tech company Lotame, to build Gravity4. Grigorovici didn’t respond to requests for comment.

Gravity4 kept the acquisition spree going, targeting struggling ad-tech startups that could be picked up on the cheap, primarily in stock transactions, people familiar with the situation said. Chahal also made multiple bids of as much as $350 million to buy Rocket Fuel Inc., a publicly traded programmatic advertising company. Monte Zweben, Rocket Fuel’s then interim CEO, described the offer in a September press release and letter to Chahal as “not credible.”

People familiar with Gravity4’s acquisition offers said the company drastically over-inflated its own valuation, which would be difficult to refute without an independent audit. As the controlling shareholder, Chahal wasn’t required to seek a fair-market-value assessment by an outside firm, said Steve Allan, head of analytics for Silicon Valley Bank. Startups took the deal because the alternative typically was to shut down.

Chahal, who began walking around the office periodically in a black t-shirt with gold letters that read “BOSS,” chewed out employees for not hitting results and complained about spending $1 million of his own money each month to keep the company running, said people familiar with the events. He sent expletive-laced e-mails to employees, including one in January seen by Bloomberg in which he wrote, “Earn your f---ing salary vs. leeching off my coat tails” and warned that if anyone shared the message, he “can’t wait to fire and sue your a--.”

The line between personal and professional projects began to blur for Chahal. He produced a hip-hop record called The Legacy, which features a smoky set of angel wings on the cover with the tagline, “Hope. Love. Destiny.” The Gravity4 holiday party, where employees from recently acquired companies gathered in the top-floor office to meet their new CEO, unexpectedly turned out to be an album release party, said people familiar with the event.

Under pressure from his second alleged domestic-assault incident, Chahal used ad credits from the company’s Facebook Inc. account this year to promote a page he created on the social network calling San Francisco District Attorney George Gascón a racist, two people familiar with the situation said. The campaign prevented Gravity4 from serving some ads it had previously sold to clients for display on Facebook, they said.

As it became clear to many employees that Gravity4’s underlying technology wouldn’t come together, workers began to quit—or were dismissed without warning, the people said. Grigorovici left the company in February, and dozens of other employees followed him out the door. Some staff who were promised company shares never received stock certificates, said three people familiar with the situation. The shrinking company moved out of its fancy digs into a co-working space.

Kamal Kaur took the reins last month after her brother was found to be in violation of his probation. Chahal was ordered to turn in his passports. Gravity4’s U.S. business, which had a staff of about 50 a year ago, now has just a few, said people familiar with the situation. Most of what remains of the company, according to its website, is its overseas acquisitions in Europe, Asia, and Latin America.

Chahal still retains a sort of twisted admiration from some followers. People who worked with him said he could have easily taken his millions and moved on after RadiumOne and his criminal conviction. Instead, he chose to try again and pursue his vision. Such dedication is, in some ways, what Silicon Valley celebrates.